SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
    1934. For the quarterly period ended: June 30, 2001

                                       OR

[ ] Transition  Report Under Section 13 or 15(d) of the Securities  Exchange Act
    of 1934. For the transition period from: to

                       Commission File Number: 000-030813

                                  AlphaRx, Inc.
                 (Name of Small Business Issuer in its Charter)

         Delaware                                       98-0177440
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                             10-75 East Beaver Creek
                             Ontario L4B 1B8, Canada
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (905) 762-0745

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.0001 par value
                                (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing  requirements  for the past 90 days. Yes
[X] No [ ]

The number of outstanding shares of registrant's Common Stock on August 8, 2001
was 50,855,630.

Transitional Small Business Disclosure Format. Yes [  ]  No [X]


<PAGE>



                                  ALPHARx, INC.

                                   FORM 10-QSB

                                  June 30, 2001


                                TABLE OF CONTENT

<TABLE>
<CAPTION>
DESCRIPTION                                                                        Page
<S>                                                                                <C>
Part I       Financial Information

Item 1       Financial Statements                                                    3

             Unaudited Balance Sheets as of June 30, 2001 and 2000                   3

             Unaudited Statements of Operations for the three months ended           5
             June 30, 2001 and 2000

             Unaudited Statements of Operations for the nine months ended June       6
             30, 2001 and 2000

             Unaudited Statements of Cash Flows for the nine months ended June       7
             30, 2001 and 2000

             Notes to the Financial Statements                                       8

Item II      Management's Discussion and Analysis of Financial Condition and         11
             Results of Operations

Part II      Other Information                                                       14

SIGNATURE PAGE                                                                       15

</TABLE>


2
<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS


                                  ALPHARx, INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS
                          As of June 30, 2001 and 2000

                                   (Unaudited)


                                     ASSETS
<TABLE>
<CAPTION>
                                                                     June 30       June 30
                                                                      2001          2000
<S>                                                                 <C>           <C>
CURRENT ASSETS

   Cash                                                             $   (6,327)   $  54,726
   Due from officer                                                                     313
                                                                     ---------    ---------


     TOTAL CURRENT ASSETS                                               (6,327)      55,039


PROPERTY, PLANT & EQUIPMENT, at cost


         Less accumulated deprecation of $21,123(note 4)                69,506
         Less accumulated deprecation of $11,816                                     48,056
                                                                                  ---------

OTHER ASSETS

   Investment                                                           46,408       46,408
                                                                     ---------    ---------


TOTAL ASSETS                                                        $  109,587    $ 149,503
                                                                     =========    =========

</TABLE>

See accountant's review report
The accompanying notes are an integral part of this statement

3
<PAGE>




                      LIABILITIES AND SHAREHOLDERS' EQUITY
                          As of June 30, 2001 and 2000

<TABLE>
<CAPTION>

                                                       June 30           June 30
                                                         2001             2000
<S>                                                  <C>             <C>
CURRENT LIABILITIES

   Accounts Payable and Accrued Liabilities          $    36,347     $     5,247
   Accrued Interest                                        3,933
                                                      ----------       ---------
        TOTAL CURRENT LIABILITIES                         40,280           5,247

LONG-TERM LIABILITIES

   Loan Payable                                            4,000
   Loan from Shareholders                                                  2,365
                                                      ----------      ----------
       TOTAL LONG-TERM LIABILITIES                         4,000           2,365


SHAREHOLDER'S EQUITY

Common Stock, common, $ 0.0001 par value,
   Authorized 100,000,000 shares, issued and
   outstanding 50,855,630 shares (note 5)            $     5,086
   Additional paid-in capital                          1,557,557
   Deficit                                            (1,497,336)
                                                      ----------
Common Stock, common, $0.001 par value,
   Authorized 100,000,000 shares, issued and
   outstanding 4,908,833 shares                                      $     4,909
   Additional paid in capital                                          1,344,344
   Deficit                                                            (1,207,362)
                                                                     -----------
TOTAL SHAREHOLDER'S EQUITY                                65,307         141,891
                                                      ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $   109,587     $   149,503
                                                      ==========     ===========

</TABLE>

See accountant's review report
The accompanying notes are an integral part of this statement

4
<PAGE>




                                  ALPHARx, INC.

                          (A Development Stage Company)

                             STATEMENT OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 2001 and 2000
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                  June 30
                                                             2001         2000
                                                             ----         ----
<S>                                                      <C>            <C>
SALES                                                    $      0       $      0

SELLING, GENERAL AND ADMINISTRATIVE                        47,354         85,418
EXPENSES                                                  -------        -------

         LOSS FROM OPERATION                              (47,354)       (85,418)

OTHER INCOME
   Interest Income                                       $      0       $    498
   Other Income                                                 0              0
                                                          -------       --------
                                                                0            498

         LOSS BEFORE INCOME TAXES                         (47,354)      (84,920)


INCOME TAX                                                      0             0
                                                          -------       --------

NET LOSS                                                 $(47,354)     $(84,920)
                                                          ========      ========

</TABLE>

See accountant's review report
The accompanying notes are an integral part of this statement


5
<PAGE>



                                  ALPHARX, INC.

                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                FOR THE NINE MONTHS ENDED JUNE 30, 2001 and 2000


                                                                  June 30
                                                            2001          2000
                                                            ----          ----
SALES                                                  $       0      $       0

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES             210,695        200,924
                                                        --------       --------

         LOSS FROM OPERATION                            (210,695)      (200,924)
                                                        --------       --------
OTHER INCOME
   Interest Income                                     $      12      $     508
   Other Income                                                0            903
                                                        --------       --------
                                                              12          1,411

         LOSS BEFORE INCOME TAXES                       (210,683)      (199,513)


INCOME TAX                                                     0              0
                                                        --------        -------

NET LOSS                                               $(210,683)     $(199,513)
                                                        ========       ========


6
<PAGE>



                                  ALPHARX, INC.

                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTHS ENDED JUNE 30, 2001 and 2000
<TABLE>
<CAPTION>


                                                                     June 30
                                                                2001          2000
<S>                                                          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                  $(210,683)   $(199,513)
   Depreciation Amount                                          10,064        5,290

   Adjustments to reconcile note income to net cash
   Cash provided by operating activities:
     Increase (Decrease) in Accounts Payable                     7,508      (13,779)
     Increase in Due from Officer                                              (313)
     Increase (Decrease) in Loan from Shareholders              (2,365)       2,365
     Increase in Accrued Interest                                3,932
     Increase in Loan Payable                                    4,000
                                                             ---------    ---------
NET CASH PROVIDED/(USED) BY OPERATIONS ACTIVITIES            $(187,544)   $(205,950)

CASH FLOWS FROM INVESTING ACTIVITIES
     Increase of Improvements                                   (1,837)
     Purchase of Automobiles                                                (22,067)
     Acquisition of Furniture & Fixtures                                    (11,656)
     Acquisition of Machinery & Equipment                      (14,303)     (16,388)
                                                              ---------    ---------
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES             $ (16,140)   $ (50,111)

CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from Issuance of Stock                             147          681
       Increase in Additional Paid-In Capital                  183,266      308,544
                                                             ---------    ---------
NET CASH PROVIDED/(USDED) BY FINANCING ACTIVITIES            $ 183,413    $ 309,225

NET INCREASE (DECREASE) IN CASH                                (20,271)      53,164

CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD

CASH AS OF September 30, 2000 (1999)                            13,944        1,562
                                                             ---------    ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $  (6,327)   $  54,726
                                                             =========    =========
</TABLE>

SUPPLEMENTARY DISCLOSURE:
The statement of cash flows using indirect method as defined under Statement of
Financial Accounting Standard of No. 95.

7
<PAGE>



                                  ALPHARX, INC.

                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 2001


NOTE 1. INTERIM FINANCIAL INFORMATION

In the opinion of management,  the accompanying  unaudited financial  statements
contain all necessary  adjustments,  which are of a normal recurring  nature, to
present fairly the financial  position of AlphaRx,  Inc. as of June 30, 2001 and
2000,  the results of operations for the three months and nine months ended June
30, 2001 and 2000,  and the cash flows for the nine  months  ended June 30, 2001
and 2000, in conformity with generally accepted accounting principles. Operating
results for the three  months  period  ended June 30,  2001 are not  necessarily
indicative  of the  results  that may be  expected  for the entire  year  ending
September 30, 2001 or future operating periods.

These unaudited interim financial  statements should be read in conjunction with
the financial  statements and related notes contained in AlphaRx's annual report
on Form 10-KSB for the year ended September 30, 2000.

NOTE 2. FORMATION AND ORGANIZATION OF BUSINESS

ALPHARX,  INC.  (the  Company) was  incorporated  under the laws of the State of
Delaware on August 8, 1997. The company is still in its developing stage and had
no active business operation as of June 30, 2001.



8

<PAGE>



                                  ALPHARX, INC.

                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 2001


NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of ALPHARX, INC. is presented to
assist in  understanding  the  Company's  financial  statements.  The  financial
statements  and notes are  representations  of the Company's  management  who is
responsible  for their  integrity and  objectivity.  These  accounting  policies
conform to generally accepted  accounting  principles and have been consistently
applied in the preparation of the financial statements.

Cash and Cash Equivalent

For purpose of these statements,  cash equivalent included cash on hand, cash in
bank,  and all  short-term  debt  securities  purchased with a maturity of three
months or less.

Depreciation

The company's property,  plant, and equipment are depreciated using the Modified
Accelerated  Cost Recovery  System Method,  with recovery  period of 3 years & 7
years.

Property and Equipment

Property and equipment are stated at cost.  Depreciation  is calculated by using
Modified Accelerated Cost Recovery System Method for financial reporting as well
as income tax  reporting  purposes  at rates  based on the  following  estimated
useful lives:

                Automobiles                           5 years
                Machinery and Equipment               3 years
                Furniture and Fixtures                7 years
                Improvements                         10 years

The company capitalizes  expenditures that materially increase assets' lives and
expense ordinary  repairs and maintenance to operating as incurred.  When assets
are sold or  disposed  or  otherwise  fully  depreciated,  the cost and  related
accumulated  deprecation  are removed  from the accounts and any gain or loss is
included in the statement of income and related earnings.


9
<PAGE>

                                  ALPHARX, INC.

                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                                  June 30, 2001

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued.)

Income Taxes

The company is a C Corporation that subjects to accrual of federal tax according
to tax laws. There is no income tax for year ended since the company was under a
development  stage and did not have  active  business  operations.  The State of
Delaware does not impose tax on corporation net income.


NOTE 4. PROPERTY, PLANT & EQUIPMENT

                                                         Life Year
Automobiles                                 $22,067              5
Machinery & Equipments                       55,069              3
Furniture & Fixtures                         11,656              7
Improvements                                  1,837
                                            -------
     Less accumulated depreciation           21,123
                                            -------
                                            $69,506
                                            =======

NOTE 5. COMMON STOCK

The Company is authorized  to issue  100,000,000  shares of common stock.  As of
June 30,  2001,  50,855,630  shares of such  common  stock had been  issued  and
outstanding, each share bears a par value of $0.0001.


10
<PAGE>



ITEM 2: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION OR PLAN OF
OPERATION

       The following  discussion and analysis should be read in conjunction with
the Financial  Statements,  including the Notes thereto,  appearing in this Form
10-QSB.  Except for the historical  information  contained  herein the foregoing
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  Our actual results could differ  materially from those projected
in the forward-looking statements discussed herein.

General

       We are a development  stage company engaged in the development of new and
proprietary drug delivery products. We have developed two types of drug delivery
systems,  the Colloidal Lipid Dispersion  System (the "CLD System") and the Self
Emulsifying  Controlled Release Tablet System (the "SECRET System" and together,
the "BCD Systems"). The CLD System is designed to deliver drugs through the skin
in order to reduce the gastrointestinal irritation that is a side effect of many
orally  administered  drugs,  and the  SECRET  System  is  designed  to  provide
continuous,  controlled  delivery of an incorporated drug. In addition,  the BCD
Systems  are  designed to improve the  bioavailability  of poorly  water-soluble
drugs.

       Since our inception in August 1997, we have devoted substantially all our
efforts to research  and  development  conducted  on our own behalf with the BCD
Drug Delivery Systems.  Our primary  activities since inception (August 7, 1997)
have been, in addition to research and development, establishing our offices and
research   facilities,   recruiting   personnel,   filing  patent  applications,
developing a business strategy and raising capital.

       We have experienced significant operating losses since our inception, and
expect to incur substantial and continuing losses for the foreseeable future. We
incurred a net loss of approximately $47,354 for the three months ended June 30,
2001, resulting in an accumulated deficit of approximately  $1,497,336. To date,
we have  received  only  limited  revenue,  all of which has been from  interest
earned from invested funds.

       We intend to continue  investing in the further  development  of our drug
delivery  technologies  and to actively  seek  collaborators  and  licensees  to
accelerate the development and  commercialization of products  incorporating our
BCD Drug  Delivery  Systems.  Depending  upon a variety  of  factors,  including
collaborative arrangements, available personnel and financial resources, we will
conduct  or fund  clinical  trials  on such  products  and  will  undertake  the
associated  regulatory  activities.  We will  need to  make  additional  capital
investments in laboratories  and related  facilities,  including the purchase of
laboratory and pilot scale manufacturing  equipment. As additional personnel are
hired in 2001 and beyond,  expenses can be expected to increase  from their 2000
levels.


11
<PAGE>



RESULTS OF OPERATIONS

       The first nine months of fiscal  year 2001 ending June 30, 2001  resulted
in a net  loss  $210,683  from  operations  as  compared  to  $199,513  for  the
corresponding  fiscal 2000 period.  The increase was primarily due to higher R&D
costs  as  a  result  of   spending  on   clinical   development.   General  and
administrative expense are less than in 2000 due to general belt tightening.

FINANCIAL POSITION

       Shareholders'  equity has decreased  from $141,891 to $65,307 as a result
of losses for the nine months of $210,683.

LIQUIDITY AND CAPITAL RESOURCES

       Since inception, we have financed operations principally from the sale of
Common  Stock  and  expect  to  continue  this  practice  to  fund  our  ongoing
activities.

       We   currently  do  not  have   sufficient   resources  to  complete  the
commercialization  of any of our proposed  products or to carry out our business
strategy. Therefore, we will likely need to raise substantial additional capital
to fund our  operations  sometime in the future.  We cannot be certain  that any
financing will be available when needed. Any additional equity financings may be
dilutive to our existing  shareholders,  and debt financing,  if available,  may
involve restrictive covenants on our business.

       We expect to continue to spend capital on:

       1. research and development programs;
       2. preclinical studies and clinical trials;
       3. regulatory processes; and
       4. establishment  of our own pilot  scale  manufacturing  and  marketing
capabilities or a search for third party manufacturers and marketing partners to
manufacture and market our products for us.

       The amount of capital we may need will depend on many factors, including:

       1. the  progress,  timing  and  scope  of our  research  and  development
programs;
       2. the progress, timing and scope of our preclinical studies and clinical
trials;
       3. the time and cost necessary to obtain regulatory approvals;
       4. the time and cost  necessary to establish  our own sales and marketing
capabilities or to seek marketing partners to market our products for us;
       5. the time and cost  necessary  to respond to  technological  and market
developments; and
       6. new collaborative,  licensing and other commercial  relationships that
we may establish.

       The inability to raise capital  would have a material  adverse  effect on
the Company.  We currently have no capital commitments other than the payment of
rent on our facilities lease.

12
<PAGE>

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

       AlphaRx  is a  development  stage  company.  Certain  of the  information
contained in this document constitutes "forward-looking  statements",  including
but not limited to those with respect to the future  revenues,  our  development
strategy,  involve  known and unknown  risks,  uncertainties,  and other factors
which may cause our actual results, performance or achievements to be materially
different  from any future  results,  performance or  achievements  expressed or
implied by such forward-looking  statements. Such factors include, among others,
the risks and  uncertainties  associated with a drug delivery  company which has
not  commercialized  our  first  product,  including  a history  of net  losses,
unproven  technology,  lack of manufacturing  experience,  current and potential
competitors with significant technical and marketing resources,  need for future
capital  and  dependence  on  collaborative   partners  and  on  key  personnel.
Additionally,  we are subject to the risks and uncertainties associated with all
drug delivery companies,  including  compliance with government  regulations and
the  possibility  of patent  infringement  litigation,  as well as those factors
disclosed  in our  documents  filed  from  time to time with the  United  States
Securities and Exchange Commission.


13
<PAGE>



PART II: OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

     None.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

     During the three  months  ended June 30,  2001,  we have  issued or sold an
     aggregate of 1,467,300  common shares under Regulation S for a total amount
     of $183,413 that were not  registered  under the Securities Act of 1933, as
     amended.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 5 - OTHER INFORMATION

     None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     (a) EXHIBITS.

         None.

     (b) REPORTS ON FORM 8-K

         No reports on Form 8-K were filed during the quarter ended June 30,
         2001.


14

<PAGE>



                                   SIGNATURES:


     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of 1934,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


DATED: August 10, 2001


                                             ALPHARx, INC.

                                             By:  /s/ Michael M. Lee
                                                  --------------------------
                                                  Michael M.  Lee, President

                                             Directors:


                                                  /s/ Michael M. Lee
                                                  --------------------------
                                                  Michael M.  Lee, Director


                                                  /s/ Sai Ming Wong
                                                  --------------------------
                                                  Sai Ming Wong, Director


                                                  /s/ Joseph Schwartz
                                                  --------------------------
                                                  Joseph Schwartz, Director


                                                  /s/ Sandro Persia
                                                  --------------------------
                                                  Sandro Persia, Director




15